1 FTSE growth stock to buy and hold

This Fool delves deeper into a FTSE growth stock he likes in a burgeoning market. He explains why he would buy and hold the shares for his portfolio.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

One FTSE growth stock I like the look of is CVS Group (LSE:CVSG). Here’s why I would add the shares to my holdings for the long term.

Growth market

Pet ownership and pet care is a huge growth market. According to the Pet Food Manufacturers Association, it is estimated that 59% of households in the UK have pets as of 2021. In 2020, consumers spent nearly £8bn on pets and related products in the UK alone, according to data compiled by Statista.

CVS Group is one of the largest veterinary services providers in the UK. CVS has over 500 practices supported by more than 1,900 vets and 2,500 nurses. Owning a pet is a wonderful thing in my opinion. Much like us, our pets need food, water, exercise, accessories, and healthcare. 

As I write, CVS shares are trading for 2,000p. This is up from 1,446p at this time last year, which is a 38% return over 12 months.

Why I like CVS Group

CVS’ recent and historic performance has been excellent. I do understand past performance is not a guarantee of the future; however, I use it as a gauge. In November, CVS provided a trading update for the start of its new fiscal year. Total sales grew by nearly 14% in the four month period to 31 October 2021 compared to the same period last year. Positive cash generation and further investment in facilities has also been a priority. Looking at past performance, I can see total revenue and gross income have increased year on year for the past four years.

With the rising number of pets in the UK, I actually see CVS shares as defensive. The need for veterinary services and animal consumer goods are essential for pets. There’s no such thing as free healthcare for pets, unlike for humans who can rely on free healthcare in the UK provided by the NHS. 

Finally, I can see insiders own shares of CVS Group. I am usually buoyed when insiders own shares of a firm I am reviewing for investment viability. This is for two reasons. Firstly, insiders could sell shares for any number of reasons but they would only buy them for one reason – they believe the shares will rise. Second, who better to know if a company is heading for success than those who run it?

FTSE stocks have risks

Despite my bullish attitude towards CVS Group, I must note two risks associated with buying the shares. Firstly, like most growth markets, there are many firms vying for market share and looking to get ahead of the competition. One competitor that springs to mind is Pets at Home Group. Competition can affect performance and shareholder returns. Secondly, there is a concern about the lack of availability of vets in the UK, which could affect operations and in turn performance and returns too.

Overall, I like CVS Group and would buy the shares for my holdings and keep them for the long term. Performance has been positive for some time and seems to be continuing on an upward trajectory. In addition to this, the market as a whole is growing in line with increased pet ownership, which bodes well for CVS as a FTSE growth stock for my portfolio.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Number three written on white chat bubble on blue background
Investing For Beginners

3 investing mistakes to avoid when buying UK shares for 2025

Jon Smith flags up several points for investors to note when it comes to thinking about which UK shares to…

Read more »

Investing Articles

Will the rocketing Scottish Mortgage share price crash back to earth in 2025?

The recent surge in the Scottish Mortgage share price caught Harvey Jones by surprise. He was on the brink of…

Read more »

Investing Articles

2 cheap shares I’ll consider buying for my ISA in 2025

Harvey Jones will be on the hunt for cheap shares for his ISA in 2025 and these two unsung FTSE…

Read more »

Investing Articles

I am backing the Glencore share price — at a 3-year low — to bounce back in 2025

The Glencore share price has been falling for some time, but Andrew Mackie argues demand for metals will reverse that…

Read more »

Road trip. Father and son travelling together by car
Investing Articles

A 10% dividend yield? There could be significant potential here to earn a second income

Mark Hartley delves into the finances and performance of one of the top-earning dividend stocks in his second income portfolio.

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

Charlie Munger recommended shares in this growth company back in 2022. Here’s what’s happened since

One of Charlie Munger’s key insights is that a high P/E ratio shouldn’t put investors off buying shares if the…

Read more »

Investing Articles

What might 2025 have in store for the Aviva share price? Let’s ask the experts

After a rocky five years, the Aviva share price has inched up in 2024. And City forecasters reckon we could…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Trading around an 11-year high, is Tesco’s share price still significantly undervalued?

Although Tesco’s share price has risen a lot in the past few years, it could still have significant value left…

Read more »